Delta Plans Two New York Hubs 12 Miles Apart

Delta will open a domestic hub at New York LaGuardia and an international hub at New York Kennedy.

Ted Reed

ATLANTA (TheStreet) -- People used to say the airline hubs in Detroit and Minneapolis (once belonging to Northwest, now Delta(:DAL)) were too close.

But now Delta is trying something never tried: operating hubs at two New York airports, LaGuardia and Kennedy, a dozen miles apart. The carrier said Friday that by summer, it will build its LaGuardia operations into a hub providing 264 daily departures to more than 60 cities. They include competitors' hubs in Charlotte, N.C., Dallas, Houston, and Miami; key destinations in upstate New York; and small cities such as Wilmington, N.C.

The move represents Delta's effort to use 132 LaGuardia slots, just acquired in a trade with US Airways(:LCC), to establish itself as the primary airline in the world's biggest travel market. The slots will enable it to add 100 flights and 26 destinations.

While operating a domestic hub at LaGuardia, which does not permit international flights, Delta will also continue to operate an international hub at Kennedy, where it offers 140 daily departures to 80 destinations and plans to open a $1.3 billion terminal early in 2013.

Of course, LaGuardia cannot be a hub in the traditional sense. In Charlotte and Dallas, hub carriers US Airways and American(:AMR) have banks of flights in which 80 airplanes arrive and depart within one hour. The total number of operations permitted in one hour at La Guardia, by all airlines, is about 70.

The limitations imposed by crowded New York air space and by LaGuardia's small size mean Delta will have to operate a Southwest(:LUV)-style hub, where aircraft do not actually arrive in narrow time windows and passengers may routinely wait much longer than an hour between flights.

"I don't think Delta is doing this primarily because of the connecting possibilities," airline consultant Robert Mann says. "As they have said, they are doing this because they have so many corporate customers who would prefer to go to LaGuardia for domestic trips."

"They will undoubtedly create some connecting opportunities, but they will construct schedules the way Southwest constructs schedules -- a rolling hub as opposed to a highly structured hub," Mann says. "You cannot amass enough slots to have big banks of flights during a desirable period."

Competition between New York's four leading airlines is daunting. In Newark, the biggest hub, United(:UAL) offers about 400 daily departures to about 150 destinations. At Kennedy, JetBlue(:JBLU) dominates domestic service, and operates a smallish hub, seeking to capitalize on a beautiful terminal and near-hourly service on the most important trans-Atlantic route: New York-London Heathrow. American is also the No. 2 carrier at La Guardia.

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"United still serves more destinations from the three New York airports than anybody else," United spokesman Rahsaan Johnson says. Every United destination is served from Newark, with most hub service from the other two airports. American spokesman Tim Smith says: "American has served New York for nearly 85 years -- we've competed vigorously since day one, and that is still our intent today." American is operating under bankruptcy court protection.

It is possible, Mann says, that American's bankruptcy court restructuring will include a redefinition of the carrier's mission at LaGuardia to include flights on larger aircraft to key destinations, rather than an overabundance of American Eagle regional jet service. "American has a strong franchise in New York, but it has diminished over time as people take chunks out of it," he says. "They have to put up a better fight."

At a news conference Friday morning, Gail Grimmett, Delta senior vice president for New York, said Delta plans "the largest single expansion at LaGuardia in over 40 years," adding 4 million additional seats per year that will "put Delta into nearly all of the top 50 domestic markets at LaGuardia."

Delta will operate 32 gates at LaGuardia and spend $140 on airport improvements. "LaGuardia is the businessman's preferred airport," she says. "We have a strong hub operation at JFK for international travel. At LaGuardia, we are providing service that businessmen have been asking for years."

-- Written by Ted Reed in Charlotte, N.C.

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